Marvell Technology Group Ltd. (MRVL): Time to Buy on the Dip?

Page 1 of 2

Marvell Technology Group Ltd. (NASDAQ:MRVL) was down as much as 15% last week on news that a federal jury has ordered the chip-maker to pay nearly $1.2 billion for infringing on patents held by Carnegie Mellon University. The initial damage award comes out to about $2 per share, but the stock is only down $1.30, effectively pricing in a $700 million hit or 60% of the total award.

With $2 billion in cash and the ability to generate strong cash flow – having generated between $70 and $250 million in each of the last eight quarters – we believe that Marvell can weather the storm. This is the third largest patent award in history, not too far ahead of the $1 billion award in the Apple-Samsung case earlier this month.

David Einhorn Greenlight Capital

Marvell is hopeful the judge will reverse the verdict based on post-trial motions, and if not, the tech company plans to appeal. Even the $1 billion award in the Samsung-Apple fallout is expected to at least be reduced according to Pamela Jones. The founder of Groklaw, a website dedicated to legal suits concerning software, believes the damages will be reduced and that there is a “real possibility that Samsung will get a new trial, at least on the damages issue.”

From a valuation standpoint, Marvell trades well below quick-growers Qualcomm and Broadcom at 12x earnings, and is the cheapest on a P/S basis (1.2x) as well. Marvell should benefit from its plans to boost gross and operating margins, which are currently 52% and 14%, respectively. The tech company’s targets are a 57% gross margin and a 25% operating margin.

Assuming that David Einhorn still owns the 32 million shares that he had at the end of 3Q, Greenlight Capital lost upwards of $32 million last week on the sell-off. What’s more is that Greenlight might have lost over $65 million since the beginning of 4Q given Marvell is down almost 25% over this time. Einhorn is Marvell’s most committed hedge fund owner of those we track (check out David Einhorn’s newest picks).

What about Marvell’s competitors?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!